Kenya’s Economic Future Hinges on Women’s Empowerment and Inclusive Growth

The World Bank’s Kenya Economic Update highlights the country’s slowed growth due to fiscal pressures, climatic shocks, and inequalities, while emphasizing the transformative potential of women’s economic empowerment. Closing gender gaps in education and labor could boost Kenya's GDP by up to 10%, fostering inclusive and sustainable development.

The latest Kenya Economic Update by the World Bank, prepared by a multidisciplinary team including the Macroeconomics, Trade, and Investment team, examines Kenya's economic trajectory in a challenging global context. Global growth reached 2.6 percent in 2023, with Sub-Saharan Africa's real GDP projected to accelerate to 4 percent by 2025-26. Kenya’s economic growth, however, has slowed to 4.7 percent in 2024 from 5.6 percent in 2023, reflecting pressures from severe floods, subdued business sentiment post-protests, and fiscal consolidation. While Kenya has made progress with inflation control and a stronger currency, persistent fiscal deficits, high debt levels, and constrained public spending weigh on its long-term growth potential. Despite improved foreign reserves and macroeconomic stabilization, achieving sustainable development remains a complex challenge.

Fiscal Pressures and the Weight of Debt

Kenya’s fiscal landscape is characterized by significant revenue underperformance and growing debt servicing costs. The fiscal deficit, though narrowed to 5.2 percent of GDP in 2023/24, remains above the target of 4.7 percent, driven by lower-than-expected revenue collections from VAT and departmental fees. This shortfall has limited the government’s capacity for social and developmental investments. Kenya's debt burden remains high, with domestic debt now comprising the majority of its liabilities, reflecting increased reliance on local borrowing. High domestic borrowing not only crowds out private-sector investment but also adds to fiscal pressures. Although the government has introduced tax reforms and expenditure rationalization policies, implementation gaps and socio-political challenges have hindered meaningful progress.

The Persistent Challenge of Gender Inequality

Kenya’s economic potential is curtailed by persistent gender disparities, despite progress in gender equality policies and legal frameworks. Women remain underrepresented in the labor market, with 60 percent of women aged 15-49 employed compared to 81 percent of men. These disparities are more pronounced in rural and arid regions, where limited access to education, early family responsibilities, and cultural norms impede women’s economic opportunities. Women are overrepresented in low-paying and informal jobs, with 17 percent engaged in unpaid labor compared to 9 percent of men. In agriculture, a significant sector for both genders, women are nearly twice as likely as men to work without pay. Compounding these challenges, women disproportionately shoulder the burden of unpaid domestic and care work, which restricts their participation in formal economic activities.

Education’s Role in Economic Empowerment

Education has been a cornerstone of Kenya’s progress, with gender parity achieved at the primary and secondary levels. However, significant disparities persist in higher education, limiting women’s entry into higher-paying sectors such as STEM fields. Educational attainment among younger generations has improved, but regional and socioeconomic inequalities remain stark. In arid and semi-arid lands (ASAL), women are more likely to lack formal education than their urban counterparts. While education enhances individual earnings—each additional year of schooling increases female earnings by 17 percent—social and cultural barriers continue to hinder women’s ability to fully leverage these gains. Additionally, early marriage and parenthood disrupt women’s educational and economic trajectories, leading to lower employment rates and earnings compared to their male counterparts.

Unlocking Growth Through Women’s Economic Empowerment

Investing in women’s economic empowerment offers transformative potential for Kenya’s growth and inclusivity. The report underscores that closing gender gaps in education and labor market participation could boost Kenya's GDP by up to 10 percent. Empowering women economically also improves household decision-making, enhances social outcomes, and reduces poverty. In refugee communities and ASAL counties, where women face compounded vulnerabilities, targeted interventions are essential to bridge economic gaps. Refugee women, who experience lower employment rates and limited asset ownership, exemplify the intersection of gender and geographic disadvantages. Addressing these disparities requires multisectoral strategies, including expanding education access, addressing harmful norms, and ensuring equal participation in economic activities. Reliable, gender-disaggregated data is critical for designing effective policies and tracking progress.

Kenya’s medium-term economic outlook offers cautious optimism, with growth projected to recover to 5.1 percent by 2025-26, driven by private investment, export growth, and consumer spending. However, structural and fiscal challenges, climate vulnerabilities, and the need for governance improvements remain critical. Empowering women and addressing persistent inequalities could unlock significant economic gains, driving long-term resilience and prosperity. As the report highlights, achieving gender equality is a moral imperative and a strategic necessity for fostering inclusive and sustainable development. By tackling systemic barriers and investing in women’s economic potential, Kenya can position itself for more equitable and robust growth in the years ahead.